LivingSocial Said to Weigh Funding at $6 Billion Instead of IPO

LivingSocial may raise more than $200 million in funding that would give it a valuation of as much as $6 billion, rather than proceeding toward an initial public offering, people with knowledge of the matter said.

The proposed funding round may include both equity and debt, said two people, who asked not to be identified because the talks were private. JPMorgan Chase & Co. (JPM) is acting as an adviser in the deliberations, they said.

LivingSocial, which was in talks with banks earlier this year about raising $1 billion in an IPO, is reconsidering the prospect amid a stock-market rout that has shaved 13 percent off the Standard & Poor’s 500 Index since July 21. Companies have shelved or scrapped U.S. public offerings at a faster rate in the past three months than the comparable period of any year since 2004, Bloomberg data show.

The private funding round being considered would likely include some of LivingSocial’s existing backers as well as new investors, said two of the people. LivingSocial would reconsider an IPO at a later date even if it raises the funds, according to two people.

Groupon, the daily-coupon leader, delayed its IPO in response to market gyrations, three people familiar with the matter said earlier this month.

Another concern for LivingSocial’s management and investors is a growth slowdown in the market for daily coupons, two of the people said. LivingSocial had fewer weekly unique visitors in August than during the peak in June, research firm ComScore Inc. (SCOR) said last month.

LivingSocial’s Funding

Groupon said in June it has never turned a profit, and competitors including Facebook Inc. and Yelp Inc. have closed or pulled back their deal services.

LivingSocial, led by co-founder Tim O’Shaughnessy, raised $400 million in April, valuing the company at $3.5 billion, two people with knowledge of the matter said at the time. It has raised a total of $627 million from investors, including Grotech Ventures, Institutional Venture Partners, T. Rowe Price Group Inc. and e-commerce site Amazon.com Inc. (AMZN)

Brendan Lewis, a spokesman for LivingSocial, declined to comment on the company’s funding plans. Tasha Pelio, a spokeswoman for New York-based JPMorgan, also declined to comment.

LivingSocial delivers daily discounts on restaurants, hotels, events, and other goods and services. The daily-deal market may generate $4.17 billion in U.S. sales in 2015, compared with $1.97 billion this year, according to research firm BIA/Kelsey in Chantilly, Virginia.

Chicago-based Groupon may still be able to sell shares before year-end, two people said earlier this month.

To contact the reporters on this story: Douglas MacMillan in San Francisco at dmacmillan3@bloomberg.net; Serena Saitto in New York at ssaitto@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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